In our regular Q&A series, Croner Taxwise VAT adviser Tony Chamberlain reviews changes to the temporary reduced rate of VAT for supplies of catering, holiday accommodation and admissions to attractions from 1 October
My client operates a furnished holiday let business and has been accounting for VAT at 5% on their holiday lets since the government introduced the temporary reduced rate for these sectors from 15 July 2020. I understand this temporary reduced rate is due to cease from the end of September – how should they treat deposits and pre-payments they receive now before the end of the month?
While there will be a change to the temporary reduced rate from the end of the month, it is not due to cease altogether. In March 2021 the Chancellor confirmed that the temporary reduced rate for catering, holiday accommodation and admissions to attractions would be extended by a further year to the end of March 2022 – however this would be in two tranches:
